Despite the financial challenging times the country faces, the number of tenants with good credit scores continues to grow.
According to TPN, one of SA’s well-known credit bureaus, 83% of tenants are in good standing as of the first quarter of this year, their latest residential rental monitor report has shown. Waldo Marcus, marketing director at TPN said this is an improvement compared to the last quarter of 2024.
“These figures are remarkable considering that over 8-million South Africans are unemployed, yet tenants are demonstrating improved payment behaviour. This is a clear sign that consumers have an increased commitment to maintaining a good payment record while ensuring housing stability,” he said.
These figures are remarkable considering that over 8-million South Africans are unemployed, yet tenants are demonstrating improved payment behaviour.
— Waldo Marcus, marketing director at TPN
In 2013, over 60% of tenants rented within the R3,000 to R7,000 band. That number has dropped to 44.5% as escalating rental prices nudge more tenants into higher-value brackets. The R7,000 to R12,000 sector now represents over 30% of tenants, triple what it was a decade ago, while luxury rentals (above R25,000) have also tripled and now account for 1.7% of the market, said Marcus.
“This shift illustrates stronger national rental growth, which stood at 4.49% in Q1 2025. The higher-rental value bands are driving this figure, with escalations of between 5.12% to 5.68% in the R7,000 and above categories. In contrast, escalations in lower-value segments have been subdued, reflecting the pressure of vacancies and affordability constraints,” he said.
An important factor fuelling growth in residential rentals is the apparent shift away from home ownership.
According to Stats SA’s 2024 General Household Survey, 40% of South Africans rent their homes or occupy property rent-free and rely on property investors for their accommodation.
The move away from home ownership largely stems from high interest rates and economic insecurity, with households reluctant to take on additional debt, according to the report.
“Despite interest rate decreases, home ownership has not increased, with only 6.3% of South African households servicing a bond, continuing a downward trend since 2020. What this demonstrates is a distinct lack of appetite to shoulder additional debt,” said Marcus.
The increase in households seeking rental accommodation has led to greater demand, which has shifted over the last decade. In 2013, over 60% of tenants were renting properties valued between R3,000 and R7,000 per month. This figure has steadily declined, resulting in it shrinking to 44.5% by the first quarter of 2025, the report indicated.
Two-thirds of tenants in this band now fall into the upper tier, paying between R4,500 and R7,000. In a similar trend, the proportion of tenants paying less than R3,000 per month has halved from 25% in 2013 to 12.6% in 2025 as annual escalation shifts rental units into higher rental bands.
By contrast, rental units priced between R7,000 and R12,000 have indicated consistent growth with a marked acceleration from 2023. As of early 2025, more than 30% of tenants fall into this category, three times the figure from 10 years ago.
In addition, the R12,000 to R25,000 band has grown significantly – from a mere 2.4% in 2013 to a healthy 11% at present.
He said the national residential rental escalation rate slowed in 2024, largely driven by the lower rental value bands. In comparison to escalations in 2023, Marcus said this is a strong reflection of the economic constraints faced by households over the last year.
“Even though consumers were given some respite with interest rate decreases in the latter part of 2024, it has taken some time for these lower rates to have a decisive impact on over-extended household budgets. As vacancies increased in the lower rental value bands, escalations were ultimately sacrificed to maintain occupancy levels. By comparison, the higher rental value bands showed lower vacancy rates while sustaining reasonable escalations,” said Marcus.
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